Impact of National and International Regulations on Indian Generic Drugs Industry

Impact of National and International Regulations on Indian Generic Drugs Industry

Surabhi Singh (Trident ET Group of Institutions, India)
Copyright: © 2017 |Pages: 17
DOI: 10.4018/978-1-5225-2414-4.ch004
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This article looks at evolution of the intellectual property right laws in India with regard to pharmaceutical drugs, and their impact on the pharmaceutical industry in India. The amendments to Indian Patents Act 1970 as a result of India's obligations towards the TRIPS agreement while balancing the need to safeguard the interests of its population and domestic industry have also been looked at. International laws and treaties that impact the Indian industry have been analysed.
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Definition Of Generic Drugs

A generic pharmaceutical drug is equivalent to a brand-name product in dosage, strength, route of administration, quality, performance, and intended use. E.g. Paracetamol, a painkiller, is the generic name for branded drugs like Crocin. In most countries, the original inventor of a new medicine or drug can file a patent and assert monopoly rights on the commercial exploitation of his invention or discovery for a certain number of years – such a drug is generally called a brand-name drug. Other companies can produce and sell generic drugs after the patent protections afforded to the drug's original inventor expire.

Generic drugs go through a similarly rigorous (as a brand name drug) national and international regulatory approval before they can be released in the market. They are required to have the same active ingredient, strength, dosage form, and route of administration as the brand name product. The generic drug manufacturer must prove its drug is the same as (bioequivalent) and performs the same the brand name drug. All generic manufacturing, packaging, and testing sites must pass the same quality standards as those of brand name drugs, and the generic products must meet the same exacting specifications as any brand name product. In fact, many generic drugs are made in the same manufacturing plants as brand name drug products.

Cost Difference Between Generics and Brand-Name

The average cost of discovering, testing, and obtaining regulatory approval for a new drug, with a new chemical entity, was estimated to be as much as $800 million (all figures in US Dollars) in 2003 by DeMasi (2003) and $2.6 billion in 2014 by Tufts University (2014). Patent protection is provided to incentivise innovation and new drug development. With patent protection, pharmaceutical companies developing new (brand-name) drugs can exclude competition from the market, recoup their costs to develop the drug and make a profit.

Generic drugs are usually sold for significantly lower prices than their branded equivalents and at lower profit margins. One reason for this is that competition increases among producers when a drug is no longer protected by patents. Also, generic companies have to incur only the cost of manufacturing, and not the costs of drug discovery and development. They are thus able to maintain profitability at a lower selling price. According to FDA (Food and Drug Administration, U.S.A.) in 2010 alone, the use of FDA-approved generics saved $158 billion, an average of $3 billion every week. In a sample study of five commonly used medicines in India, Singhal, Nanda and Kotwani (2011) found that price-to-patient for the branded version of cetirizine, fluoxetine, ciprofloxacin, lansoprazole, and alprozolam was higher by 41%, 33%, 0%, 14%, and 31% than branded-generics. Numerous other studies have corroborated such results – generic drugs reduce the cost of medicines for patients significantly.

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